“I Didn’t Know”: Innocent Spouse Relief for Divorced Taxpayers in Sacramento

Divorce is legally complex, but in California – a Community Property state – the tax implications can linger long after the papers are signed. A common nightmare scenario for Sacramento residents involves receiving a collection notice from the IRS or FTB for a tax debt incurred by an ex-spouse.

You might ask, “The divorce decree says he/she is responsible for the taxes, so why are they garnishing my wages?”

The hard truth: The IRS is not bound by your family court divorce decree. If you filed a joint return, you are “jointly and severally liable” for the tax. This means the IRS can collect 100% of the debt from you, even if your ex-spouse earned all the income and caused all the trouble.

The Solution: Innocent Spouse Relief (Form 8857)

Federal and state laws provide an escape hatch for this exact situation. Innocent Spouse Relief can completely absolve you of the tax debt, penalties, and interest if we can prove specific criteria.

The Three Types of Relief

1. Traditional Innocent Spouse Relief

Used when there is an “understatement of tax” (e.g., your ex failed to report income or claimed false deductions). We must prove that you did not know, and had no reason to know, about the error when you signed the return.

2. Separation of Liability Relief

This allocates the tax debt between you and your ex as if you had filed separately. This is often easier to prove for Sacramento residents who are already divorced or legally separated. You are only held responsible for the portion of the tax related to your own income.

3. Equitable Relief

If you don’t fit the categories above (for example, the tax was reported correctly but just not paid), we argue for Equitable Relief. We present a narrative showing that holding you liable would be unfair. We look at factors like:

• Economic Hardship: Would paying this leave you unable to pay rent in Sacramento?
• Abuse: Were you coerced into signing the return?
• Health: Were you suffering from physical or mental health issues at the time?

The California Community Property Trap

Dealing with the FTB adds another layer of complexity. Even if you filed separately, California law might presume half your spouse’s income is yours. We specialize in untangling these community property rules to protect your assets.

Do not pay for your ex-spouse’s mistakes. Let Kugelman Law file the petition to sever your tax liability once and for all.